One thing to note though: Dropbox is a cloud provider.
Dropbox saved $75M over two years by building its own infrastructure (2018)
111–120 of 218 posts
Re: Dropbox saved $75M over two years by building its own infrastructure (2018)
#112Earlier quoted context omitted.
You’ve described the historical value of cloud computing perfectly. That said, I think the days where all but the largest or most stubborn companies run their own datacenters are coming to a close. The problem will be finding skilled labor. Short-haul networking, power configurations, thermal load, hardware maintenance; these and many more are specific skills that can’t be learned overnight. Data center work used to…
Basically it makes sense to set up your own infrastructure when your business IS your infrastructure.
Same as lawyering or accounting, right?
I don't do contracts regularly unless my business in contracts.
Same with taxes.
Just another form of specialization. MSPs and data center companies have been doing this since the 1990s at least, this is just the next evolution.
Re: Dropbox saved $75M over two years by building its own infrastructure (2018)
#113I think this quote really hits the nail on the head and confirms what a lot of people may have intuitively known about the value of cloud providers: But once certain startups turn into big companies with hundreds of millions of users, with computing needs that they’ve come to intimately understand, it can be far more efficient to set up computing infrastructure designed exactly with those needs in mind. I think the m…
You’ve described the historical value of cloud computing perfectly. That said, I think the days where all but the largest or most stubborn companies run their own datacenters are coming to a close. The problem will be finding skilled labor. Short-haul networking, power configurations, thermal load, hardware maintenance; these and many more are specific skills that can’t be learned overnight. Data center work used to…
You say "stubborn" but when the savings can be in the millions of dollars, it becomes logical to own a datacenter. I can't believe datacenter people suddenly all disappeared or are retired. If the pay scale is down, they will surely appreciate working for a big company with datacenter needs.
Obviously, this only applies to huge companies like Dropbox. Everyone else is better served by AWS.
Re: Dropbox saved $75M over two years by building its own infrastructure (2018)
#114I think this quote really hits the nail on the head and confirms what a lot of people may have intuitively known about the value of cloud providers: But once certain startups turn into big companies with hundreds of millions of users, with computing needs that they’ve come to intimately understand, it can be far more efficient to set up computing infrastructure designed exactly with those needs in mind. I think the m…
> I think the main advantage of cloud providers is to offset the risk of purchasing equipment that eventually is no longer needed, Every corporate use case I have seen is labor based. They dont want the overhead of salary and healthcare for the IT department. Even if long term they end up paying more, they always view it has pay for it now or pay for it later. And they always choose later because they dont know bette…
> And they always choose later because they dont know better.
This is a dangerous assumption to make. Delaying payments and going with the crowd are both safe decisions. Safe decisions are smart decisions under normal circumstances.
Re: Dropbox saved $75M over two years by building its own infrastructure (2018)
#115Earlier quoted context omitted.
You’ve described the historical value of cloud computing perfectly. That said, I think the days where all but the largest or most stubborn companies run their own datacenters are coming to a close. The problem will be finding skilled labor. Short-haul networking, power configurations, thermal load, hardware maintenance; these and many more are specific skills that can’t be learned overnight. Data center work used to…
But it's insane that running a for-higher data center is considered a high-margin business. (And testament that the customers are VC-gorged price-unconcious baby gremlims.) In a sane economy, data centers for higher would be a fully-commoditized barely-profitable common carrier with little natural monopoly.
>But it's insane that running a for-higher[sic] data center is considered a high-margin business. (And testament that the customers are VC-gorged price-unconcious baby gremlims.)
Your analysis is incomplete which is why it looks like insane high-profit margins.
Amazon AWS (and MS Azure, Google Cloud) also sell high-value services on top of raw datacenters. It's not just commodity rack servers. Amazon keeps iterating on new value-added services (e.g. see new announcements at annual AWS re:invent conference[1]). E.g. AWS DynamoDB service was announced in 2012 and Netflix is one of the customers that use it.
In contrast, other datacenter companies that don't have the same higher value-added portfolio like Rackspace and DigitalOcean are losing money[2] or not even profitable yet[3]. Yes, the lower-tier datacenters are also adding value-added services but the breadth of their product portfolio is not in the same league as AWS/Azure/GCP.
Rackspace was losing so much business to AWS that they're trying to sell the idea of customers paying their RS employees to manage AWS.[4]
>(And testament that the customers are VC-gorged price-unconcious baby gremlims.)
Most of the revenue comes from non-VC businesses. A lot of old Fortune 1000 companies where IT is a cost center shrank their self-run datacenters and moved the workload to the cloud vendors. Another example is AWS winning the big $600 million contract from the CIA.
[1] https://www.youtube.com/results?search_query=amazon+re%3Ainv...
[2] https://www.google.com/search?q=rackspace+%22net+loss%22
[3] https://www.sdxcentral.com/articles/news/digitalocean-inhale...
Re: Dropbox saved $75M over two years by building its own infrastructure (2018)
#116Some assumptions to analyze this switch: - Dropbox saves $50M/year in AWS costs - Dropbox spends $200K/year (salary, benefits, equipment, SaaS, etc.) for their average infrastructure engineer Following those assumptions, Dropbox must hire Of course, these assumptions may be wrong (please correct them if so!) and this entirely ignores the unique computing needs of Dropbox's business, which may be unique vs. anything a…
I'm guessing the $200k is a considerable underestimate.
Re: Dropbox saved $75M over two years by building its own infrastructure (2018)
#117Earlier quoted context omitted.
But it's insane that running a for-higher data center is considered a high-margin business. (And testament that the customers are VC-gorged price-unconcious baby gremlims.) In a sane economy, data centers for higher would be a fully-commoditized barely-profitable common carrier with little natural monopoly.
Reliability concerns make datacenters resilient to commoditization. A datacenter that’s available 90% of the time is worth vastly, vastly less than 90% as much as one that 99.95% of the time. Commodity businesses are largely built on presumptions of linearity. Produce 90% as much corn/iron/wood/widgets as you expected and you’ll probably make something like 90% of the money you expected. Produce a 90% available datac…
Then you should be able to sue your provider for breaches in SLA.
0.5% downtime should void the bill.
I think presently the providers are getting all the upside. High margin, perpetual lock-in, and no consequences.
Re: Dropbox saved $75M over two years by building its own infrastructure (2018)
#118Earlier quoted context omitted.
I'm not in the web or cloud business, but I've filled a rack with my stuff before. My impression is that hardware has become a lot more capable even relative to its tasks. With high iops memory, many cores and obscene amounts of RAM, I would expect companies of a much larger scale (in $, FTEs, or most other metrics) can be served by one 4HE machine, or by one rack, or by one room. Thus I would expect the knowledge of…
There are now businesses that explicitly depend on the elasticity of the cloud and can never really be moved on premise without massive up-front investment in hardware that may only be used a few times a year for their biggest customers. Trying to hybridize these workloads hasn't been very successful as of yet. It is possible that K8S could relive this problem but I haven't seen it in practice, at scale.
Instant Elasticity in Cloud is a myth. If you think you are going to get 1k hosts just like that from AWS you will have an unpleasant experience.
I work at one of the decent size tech company and we are split between cloud and on prem. From our experience you have to inform AWS/GCP in advance (sometime way early) if you are looking to meaningfully increase capacity in zone/region.
Sure, auto scaling few hundreds of hosts may be possible but people who run a service which needs few hundreds of hosts run it directly on AWS, they will run it some kind of scheduler+resource manager which will have some kind of operational buffer anyway (as in you would already have those hosts so cloud elasticity is not a factor here).
Re: Dropbox saved $75M over two years by building its own infrastructure (2018)
#119Earlier quoted context omitted.
There are now businesses that explicitly depend on the elasticity of the cloud and can never really be moved on premise without massive up-front investment in hardware that may only be used a few times a year for their biggest customers. Trying to hybridize these workloads hasn't been very successful as of yet. It is possible that K8S could relive this problem but I haven't seen it in practice, at scale.
Instant Elasticity in Cloud is a myth. If you think you are going to get 1k hosts just like that from AWS you will have an unpleasant experience. I work at one of the decent size tech company and we are split between cloud and on prem. From our experience you have to inform AWS/GCP in advance (sometime way early) if you are looking to meaningfully increase capacity in zone/region. Sure, auto scaling few hundreds of h…
Why not go fully on-prem then? You can run kubernetes locally.
Are managed data stores that attractive? You can pay for on-prem management.
What workloads are in the cloud versus on-prem?
Re: Dropbox saved $75M over two years by building its own infrastructure (2018)
#120I work for a company that does about 100M revenue per year. Run everything on prem, we did the numbers if we moved to AWS, it was almost 10 X of our current spend. Again , depends on your business, ours is complex and compute intensive. But at scale, on-prem always wins.
Different numbers, but almost the exact same 10x spend difference moving all to AWS. We are data/compute heavy with low bandwidth use. We still use Lambda for bursty traffic if it works for the use case.